Correlation Between Palamina Corp and Grande Portage
Can any of the company-specific risk be diversified away by investing in both Palamina Corp and Grande Portage at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Palamina Corp and Grande Portage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palamina Corp and Grande Portage Resources, you can compare the effects of market volatilities on Palamina Corp and Grande Portage and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Palamina Corp with a short position of Grande Portage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palamina Corp and Grande Portage.
Diversification Opportunities for Palamina Corp and Grande Portage
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Palamina and Grande is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Palamina Corp and Grande Portage Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Portage Resources and Palamina Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Palamina Corp are associated (or correlated) with Grande Portage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Portage Resources has no effect on the direction of Palamina Corp i.e., Palamina Corp and Grande Portage go up and down completely randomly.
Pair Corralation between Palamina Corp and Grande Portage
Assuming the 90 days horizon Palamina Corp is expected to generate 1.16 times more return on investment than Grande Portage. However, Palamina Corp is 1.16 times more volatile than Grande Portage Resources. It trades about 0.05 of its potential returns per unit of risk. Grande Portage Resources is currently generating about 0.04 per unit of risk. If you would invest 6.10 in Palamina Corp on September 3, 2024 and sell it today you would earn a total of 3.17 from holding Palamina Corp or generate 51.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Palamina Corp vs. Grande Portage Resources
Performance |
| Timeline |
| Palamina Corp |
| Grande Portage Resources |
Palamina Corp and Grande Portage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palamina Corp and Grande Portage
The main advantage of trading using opposite Palamina Corp and Grande Portage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palamina Corp position performs unexpectedly, Grande Portage can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Grande Portage will offset losses from the drop in Grande Portage's long position.| Palamina Corp vs. Gold Springs Resource | Palamina Corp vs. BTU Metals Corp | Palamina Corp vs. Norsemont Mining | Palamina Corp vs. FireFox Gold Corp |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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